gas vs diesel spread

[magothy1]

The fuel/gas break is near . 20 here in SC at most places. Paid $1. 93 yesterday just east of Columbia on I-26. Pretty curious to me how it all works, one would have thought winter heating demand would have kept fuel up, but so much for thinking.

 

[BarryG]

Here I see a spread of 3 to 50 cents depending on the station. Lowest I have seen was 1. 83 unleaded/ diesel 1. 86 at a Safeway just yesterday and 1. 89 unleaded/ diesel 2. 39 at a conoco a mile away same day.



If what Brian J says is correct last night on the news they said the drop in oil prices is/was due to higher inventories than expected. Now that could be and still have low inventories of refined fuel. But then the question begs to be asked, why is that? Demand is down so could it be that the refiners are cutting production to prop up the price of fuel? Can you fault them for that- a business wanting to make money well not really. Well not unless you are the one filling your tank at artificially higher prices. (if that is the case).

 

[BrianJ]

Again, you are overlooking the fact that refined gas inventory, production levels, demand, misc issues like seasonal formulation changes, etc. are independant of OIL inventories. You can have all the oil in the world, but if it's not in production it will not help the price of GAS in and of itself. Supply of oil generally is not as big of concern in the US as the ability to refine said oil. That's why the price of gas and diesel shoots up like crazy when a disaster (natural & otherwise) strikes our refineries. The fuel supply chain is not a simple equation, there are many variables.

 

[BrianJ]

Another consideration on the pricing and demand on both gas and diesel, for those that take a look at what prices at the pump are now at sub $40/barrel oil vs the lower prices several years ago when oil was this low, is that our demand base how grown substantially, especially with diesel. With the advent of ULSD, that can now be blended to meet European specification, we now export several barges a day of REFINED diesel overseas, much more than before. And now as Europe has focused more on diesel, for what I understand we are also exporting more refined gas than ever before. The fuel supply chain is now truly a global economic base. I am not saying that is a good thing, just that's the way things are now. I personally would love to go back to LSD fuel and keep our supply to ourselves.

 

[BarryG]

Brian:

I obviously didnt state it very well. I am not disagreeing with you. I was just saying that according to the "news" oil was down due to high inventories. And to reconcile that with what you said of low inventories of fuel that you "could" have both high oil/low fuel inventories as you stated.



However if we have high oil inv that means the refiners have plenty of oil to refine. And that just "one" possiblity could be that refiners are not taking full advantage of their refining capacity. It has been said many times that demand is down recently worldwide and is expected to drop again this year. So while it may be higher than it was ten years ago it is down from the last few years.



Yes there are many other issues within the supply chain that can affect the price of fuel no doubt about it. I have no problem with a company trying to make a buck that is why they are in business. I dont have a problem with them cutting their total capacity as they have over the years by shutting down refineries/consolidating/increasing effeciency at remaining refineries etc. If I were in their business I would do the same. If you have more production capacity than you need or than you can be efficient with or can afford you cut it back. Then when demand goes up you might get caught with your pants down but at that point you dont really care as that is the new model. I would suggest that if you offered a refiner a location epa approved etc all they needed to do was build it they probably wouldnt take you up on the offer as it just doesnt really help "them". Now they just have one more plant to operate, more capacity/production helps lower the price of their final product so there is nothing in it for them except less profit per unit. If demand declines, remains steady or only increases a little they are going to lose. If they dont build they continue to win and if demand goes up they win even more. As in many businesses the wants and the needs of the business dont always coincide with the wants and needs of the consumers (outside of the product itself).



The consumers can squak all they want about the higher prices but they werent squaking when the oil/refiners were barely getting by. Consumers want their cake and to eat it too. However I am not niave enough to think that business always has our best interest at heart and that they are not above keeping production a bit below capacity (in this case but would apply to any company in any business and not just related to capacity). Are they really doing that I dont know I am just suggesting it as a possiblity and I dont doubt that they would. Not on a grand scale mind you but it would only take a few percent reduction to get the intended results. Again not that they are doing it but it is certainly possible nor would they be above doing it. Corporations have been nailed countless times doing stuff like that. Sometimes legal sometimes not. I am definitely not suggesting that what they are doing is illegal (if they are doing it at all).



I have read that we are exporting diesel to europe and we are importing unleaded from europe. Again nothing wrong with it except from the Amercian diesel consumer perspective(lowering US supply increasing cost). The American gas consumer is probably happy as his/her gas would undoubtedly be higher priced(increasing supply lowering cost). And just the opposite on the other side of the pond.

 

[Dieselnut59]

I heard a while back from a petroleum company buddy of mine that refineries had (in somewhat recent history) switched from refining a 2:1 ratio of gas to diesel to now a 1:1 ratio, to keep up with the demand and better prepare for increasing demand for diesel. This is also the company who has retrofitted almost all of its older local stores to now carry diesel.

Is there any truth in this? Sounds logical, but I have no real "evidence"...

 

[lil red cummins]

the following website is reasonably helpful in understanding what comes from a barrel of oil.



Diesel Fuel Prices: What Consumers Should Know



after doing considerable reading, it appears that the variations in what can be extracted from a barrel of oil are somewhat limited. changing the ratios too much increases cost.



hope this helps.



jim

 

[Vaughn MacKenzie]

Much of the increase in gas prices lately has had to do with unexpected drops in gasoline inventories. The price of oil has remained relatively steady, so drilling is not going to factor in the currently raising gas prices.

The US Energy stats if I'm reading them right indicate there is no appreciable drop in conventional gasoline inventories in the last couple of months. Where did you hear inventories dropped? Some refineries have dropped while others have increased inventory. I believe this info is for finished gasoline product, not crude

Last few weeks:
Stocks of Conventional Gasoline

Last several months:
Stocks of Conventional Gasoline

 

[Vaughn MacKenzie]

Here's something that makes a little more sense explaining gas price increases

The Associated Press: Crude oil is getting cheaper _ so why isn't gas?

 

[amsoilman]

Here's something that makes a little more sense explaining gas price increases



The Associated Press: Crude oil is getting cheaper _ so why isn't gas?

Hey Vaughn,

I read that same article in this AM's Paper, and it does make a lot of sense.



Wayne

amsoilman

 

[wlowe]

At the local Vons station the price of regular unleaded gas just passed Diesel. Regular gas is $2. 37 and Diesel is $2. 28. When I purchased my truck in 2001 gas was $1. 50 and Diesel was $1. 25.

 

[Ram4Sam]

It's now a tie in my area, Arco diesel 2. 159 and unleaded is 2. 159. I better go call a few gasser friends and rub it in!:-laf



Sam

 

[Tractorat]

Im not sure that I buy this argument. We've been fed a load of crap over the last several years about how oil is a world wide commodity, and that the world price is what the world price is. Which should mean that West Texas oil and European oil should cost the same. BTW, we get ALL of our gasoline in western Washington from the refinery up in Anacortes, not from Texas or Europe. So why is our gas pricing going higher ?



Im the first to admit that I dont have a crystal ball, and that I make my wild guesses based on what I observe. But I've been around long enough to know that "reports" from any company trying to explain price increases should be carefully scrutinized. And, self proclaimed "experts" with "insider" information, or know someone with "insider" information are usually trying to impress folks with their "knowledge" on the subject, whether they really know what they're talking about or not. Or, they believe what some authority figure (who probably has an agenda) says without any scrutiny.



BTW, I hear "news" story's all the time about which Ii have personal experience that is quite different from what the reporter is saying. And, the first thing you have to realize about the internet is that you have to take what you have "researched" with a grain of salt.



Just my rantings.

TRat

 

[Vaughn MacKenzie]

At the local Vons station the price of regular unleaded gas just passed Diesel. Regular gas is $2. 37 and Diesel is $2. 28. When I purchased my truck in 2001 gas was $1. 50 and Diesel was $1. 25.

I'm getting sick of hearing people getting diesel for under $2. 50 a gallon!!!!! #@$%!

 

[brods]

Don't feel bad. Around here it only went down to 2. 49 at its lowest and its back to 2. 69. Gas is 1. 95. What sucks is if I drive 30 miles away diesel is about 40 cents cheaper. Makes no sense.

Edit: one day later diesel 2. 59 and gas 1. 89

 

[Ram4Sam]

On rare occaisions, living in So Kalifornia, has it's perks... .



Sam

 

[lil red cummins]

sorry Vaughn, but there a few stations at sub $2. 00/ gal price as of yesterday. one @1. 99 and one @1. 98.

how is it that CA is less than WA?

time to fill up my four 55 gallon drums.

jim

 

[Tractorat]

Its higher in Washington because they can get away with it. The highest gas price in Washington is up in Bellingham. Bellingham is the closest major Washington city to the refinery in Anacortes. You would think that gas in that city would be the least expensive.



No matter what you hear from the "insiders", there is plenty of inventory available. Ever hear of Enron ?

 

[BrianJ]

No matter what you hear from the "insiders", there is plenty of inventory available. Ever hear of Enron ?

And you know that how? Not saying it is or is not true, just want to know what FACTS you base that statement on?



And what does Enron, that went the way of the do-do bird years ago, have to do with the current fuel situation?

 

[Tractorat]

BrianJ,

I dont know what part of the country you live in. But, here in Washington, there haven't been gas shortages. Not since the Arab embargo back in the early '70's As I mentioned, we get all of our gas in Western Washington from the refinery up in Anacortes. You may be experiencing shortages where you live. I cant speak for that. But, here in western Washington, inventories have not been an issue.



Enron manipulated energy prices to increase their profits at the expense of their customers.